Vietnam: What are the differences between the General Meeting of Shareholders and the Board of Directors?
What is the General Meeting of Shareholders in Vietnam?
Pursuant to Clause 1, Article 138 of the Enterprise Law 2020 as follows:
Rights and obligations of the General Meeting of Shareholders
1. The General Meeting of Shareholders shall consist of all voting shareholders and is the supreme body of a joint stock company.
...
Specifically, Article 137 of the Enterprise Law 2020 stipulates as follows:
Article 137. Organizational structure of a joint stock company
1. Unless otherwise prescribed by securities laws, a joint stock company may choose one of the following models:
a) A joint stock company with the General Meeting of Shareholders, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
b) A joint stock company with the General Meeting of Shareholders, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company's charter or the audit committee’s operating regulations promulgated by the Board of Directors.
2. If the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative. The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company's charter. If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives.
Accordingly, the General Meeting of Shareholders is part of the organizational structure of a joint-stock company, consisting of all voting shareholders. The General Meeting of Shareholders is the is the supreme body of a joint stock company.
What is the Board of Directors in Vietnam?
Pursuant to Clause 1, Article 153 of the Enterprise Law 2020 as follows:
The Board of Directors
1. The Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company, perform rights and obligations of the company, except the rights and obligations of the General Meeting of Shareholders.
...
Thus, the Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company and perform the rights and obligations of the company, except the rights and obligations of the General Meeting of Shareholders.
What are the differences between the General Meeting of Shareholders and the Board of Directors in Vietnam?
The differences between the General Meeting of Shareholders and the Board of Directors in Vietnam are shown through the following criteria:
Distinguishing criteria | General Meeting of Shareholders | Board of Directors |
Organizational structure | – The composition includes all voting shareholders; – The General Meeting of Shareholders meets annually once a year. In addition to the annual meeting, the General Meeting of Shareholders may hold an extraordinary meeting. | - The Board of Directors shall have 03 – 11 members. The specific quantity of members shall be prescribed by the company's charter. - The Board of Directors consists of the President of the Board of Directors and members of the Board of Directors. |
Shares and dividends | – Decide the types of authorized shares and quantity of each type; decide the annual dividends of each type of shares – Decide repurchase of more than 10% of total sold shares of each type | – Propose the types of authorized shares and quantity of each type – Decide sale of certain types of unsold authorized shares; decide other methods of raising capital; – Decide selling prices for the company’s shares and bonds; - Decide repurchase of shares as prescribed in Clauses 1 and 2, Article 133 of the Enterprise Law 2020. |
Election, dismissal | Elect, dismiss members of the Board of Directors and Controllers | Elect, and dismiss the President of the Board of Directors; - Appoint, dismiss, conclude contracts, and terminate contracts for the Director or General Director and other important managers prescribed by the company's charter |
Internal management of the company | - Take actions against violations committed by members of the Board of Directors and Controllers that cause damage the company and its shareholders – Decide the budget or total salaries, bonuses and other benefits of the Board of Directors and the Board of Controllers – Approve the rules and regulations of the company, the Board of Directors and the Board of Controllers | Supervise the Director/General Director and other executives managing the company’s everyday business. – Decide the company’s organizational structure, rules and regulations; establishment of subsidiary companies, branches and representative offices; contribution of capital to and purchase of shares of other enterprises. – Approve the agenda and documents of the General Meeting of Shareholders; convene the General Meeting of Shareholders or carry out surveys for the General Meeting of Shareholders to ratify its resolutions. |
Reorganization and dissolution of the company | Decide on the reorganization and dissolution of the company. | Propose reorganization or dissolution of the bankruptcy; file bankruptcy of the company. |
Annual Financial Statements | Approve the company's annual financial statements. | Submit annual financial statements to the General Meeting of Shareholders. |
Internal administration of the company | Take actions against violations committed by members of the Board of Directors and Controllers that cause damage the company and its shareholders | Supervise the Director/General Director and other executives managing the company’s everyday business. |
Company orientation | Approve the development orientation of the company. | Decide the company’s medium-term development strategies and annual business plans |
Competence to conclude contracts | - Decide to invest or sell assets with a value equal to or greater than 35% of the total asset value recorded in the company's most recent financial statements. - Approve contracts and transactions with a value equal to or greater than 35% of the total value of enterprise assets stated in the most recent financial statements. | -Approve contracts for purchase, sale, loan, loan and other contracts with a value equal to or greater than 35% of the total value of assets recorded in the company's most recent financial statements, unless the company's charter provides for a different percentage or value. - Approve contracts and transactions with a value of less than 35% of the total value of enterprise assets stated in the most recent financial statements |
LawNet